Stanford Bank Simulation

Developments & Trends Capital Adequacy Cost of Funds Hedging Fee Income Increasing Lending Risk

The Experience Team Oriented Control, manage bank profitability Make loans using OPM Watch the spread Have fun

Environment The economy Regulatory environment Marketplace Competition

Mechanisms Product pricing Credit policies Financial structure Securities transactions Use of personnel Advertising and promotion Premises

Initial Decisions Bank name Strategy—wholesale, retail Management areas Communications plan

Name Have fun [name must be approved by the regulator (me)]

Strategy Wholesale vs Retail Read the material Be consistent in decisions

Management Areas Economic forecasting, securities management, gap management Loan analysis Liability management – commercial Liability management – retail Capital management and income forecasting Expenses and market analysis

Communications Teamwork Meeting methods Meeting times Decision making process Read and understand BankSim instructions

CAMELS Ratings C - Capital Adequacy A - Asset Quality M - Mgmt Quality, Mgmt & BofD ability and systems (policies & procedures) E - Earnings, not just quantity, but quality, sustainability L - Liquidity S - Sensitivity to market fluctuations, Int rates, FX, Commod prices (thru loans)